Save Or Invest? Money Management For Moms

Being a parent is a wonderful experience that offers many challenges, sure, but alongside them there’s a whole new perspective on life and a kind of love the pre-baby you never even thought possible. From the moment our children are born our psychology changes completely and we dedicate our every decision on this Earth to protecting and looking after them. Thus, when we find ourselves with a meaningful sum of money it can be difficult to know how best to use it for the good of your family. After all, many parents (especially new parents) are so used to living hand-to-mouth, especially when there’s so much to be paid for with the arrival of a brand new bundle of joy. The very prospect of owning a substantial sum of money can be bamboozling.


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When it comes to managing our money sensibly, we’re often faced with a binary choice. Do we save or do we invest? Each has its benefits but each has its caveats. Neither is inherently better than the other, it’s simply a case of weighing up the pros and cons and deciding which option is best for your family.


If you save


If the thought of any sort of risk makes you nervous, then saving is the way to go. While saving is a safe bet it’s important to remember that not all savings accounts are created equal and that there’s still a risk (however slight) that you may lose some of your money. Fortunately, there are many options open to savers and if you’re okay with keeping your money in long term savings (over a space of years) you may benefit from a higher than average interest rate. The only trouble, however, is that you may not be able to access your money in the case of an emergency.


If you invest


Before you invest, it’s important to know that any investment is a gamble. Even an investment in a PLC with a trusted brand or off the back of a hot tip carries with it a certain risk. Stocks rise and fall and there’s never a guarantee that you’ll get out more or even the same amount as you put in. If you buy Starbucks stock then this is a fairly safe investment as Starbucks is likely not going anywhere. Nonetheless, since few huge innovations in the realm of coffee are on the cards it presents less chance for a big boost compared to investing in the pharma or tech industries.  


It’s always a good idea to invest in a diverse portfolio of stocks to maximise your chances of a bump and insulate you from risk.


If you do neither


Of course there’s no obligation to save or invest, although letting your money sit in your current account is the surest way to lose it slowly over a period of months or years. Keeping it in a separate account with limited access and using it only for emergencies is the best way to hold onto your money.

If all else fails, you can have the best of both worlds and allocate some of your money to savings and some to investment, although this may compromise your ability to get a high yield on your interest or make a substantial return on your investment.

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